based on the study conducted by Srivastava, Sen et al. under the aegis of National Institute of Public Finance and Policy, and the discussion paper brought out by Department of Economic Affairs( Ministry of Finance) in 1997, aims to provide a comprehensive estimate of budget-based subsidies in India. In addition, recent trends have been included from the Economic Survey for the year 2004–05. Attention is focused on bringing out the magnitude of the implicit subsidies, in addition to the explicit ones, to form an idea as to how heavy a draft do they constitute on the fiscal resources of the economy. Social security subsidies The following table shows financial size of the social security subsidies in India funded by the Union government of India. The table does not cover other programs operated by various State governments, see Public welfare in India. The social security benefits / subsidies offered by various state governments is estimated to be above Rs. 600 billion (US$10 billion). Thus total subsidies become Rs. 3,600 billion (US$60 billion). Subsidy: Meaning and economic rationale Objectives Subsidies, by means of creating a wedge between consumer prices and producer costs, lead to changes in demand/ supply decisions. Subsidies are often aimed at : inducing higher consumption/ production offsetting market imperfections including internalisation of externalities; achievement of social policy objectives including redistribution of income, population control, etc. Transfers and Subsidies Transfers which are straight income supplements need to be distinguished from subsidies. An unconditional transfer to an individual would augment his income and would be distributed over the entire range of his expenditures. A subsidy however refers to a specific good, the relative price of which has been lowered because of the subsidy with a view to changing the consumption/ allocation decisions in favour of the subsidised goods. Even when subsidy is hundred percent, i.e. the good is supplied free of cost, it should be distinguished from an income-transfer (of an equivalent amount) which need not be spent exclusively on the subsidised good. Transfers may be preferred to subsidies on the ground that i) any given expenditure of State funds will increase welfare more if it is given as an income-transfer rather than via subsidising the price of some commodities, and ii) transfer payments can be better targeted at a specific income groups as compared to free or subsidised goods. Mode of administering a subsidy The various alternative modes of administering